Preparing to go public
Whatever the reasons and motivation, accessing securities markets has a profound impact on a corporation’s governance, risks and controls framework; financial reporting and public disclosure obligations; accountability to the public and scrutiny by regulators; and not least of all, its susceptibility to market perception and reactions. Corporations accessing overseas capital markets face even greater challenges as they may be unfamiliar with the stringent regulatory and market demands of these international bourses.
Registrants and their management, who are not well-prepared, are being taken to task by the regulators and the market in increasing frequency for reasons ranging from accounting failures, late disclosure, ineffective financial reporting, poor governance practices, and internal control failures to missed profit forecast.
While international markets such as London, Tokyo, Hong Kong and Singapore continue to attract investors, the US securities markets represent the richest source of capital in the world. Entering the US capital markets, however, presents new and complex challenges to companies seeking access to such capital. US securities laws require companies to demonstrate their ability to manage their operations and financial health, control their systems and demonstrate transparency, accountability and integrity. Non-US companies entering the US securities markets for the first time face significant challenges, including the demands of US investors, time-consuming and complex registration requirements, and the intricacies of the US offering process.
For a corporation to be successful in international securities markets, be it to raise capital or list its securities, a well-conceived plan and comprehensive knowledge of the regulatory and other requirements are essential – not just in the run-up to the initial public offer, but also thereafter to ensure post-listing compliance. Common issues for many corporations seeking capital overseas include regulatory compliance, disclosure demands, financial reporting requirements, quantifying GAAP differences, and last but not least, the ability of financial reporting processes and the governance, risks and controls structure to cope with the listing and market demands.